Just weeks before Christmas in 2005, 49 homeowners in the upscale Minneapolis
suburb of Bloomington got a court order to move their manufactured homes
from the Shady Lane Court manufactured-housing park. The park had a
new owner who wanted to build condominiums on the five-acre parcel.

"I was in absolute shock," says Beverly Adrian, on learning
about the park closure. She had downsized from her four-bedroom site-built
home to a new three-bedroom, double-wide home in the park. "I was
getting ready to retire."

The residents tried to match the developer's offer. They were unsuccessful.
On April 1, 2006, Shady Lane Court was closed. In an Associated Press
article published a few weeks later, Bloomington's city attorney was
quoted as saying, "This park owner [of Shady Lane Court] doubled
his money in, I think, just seven short years or less. It's the economics
of the situation that may determine the fate of mobile-home parks or
manufactured-home parks in the metro area."

Shady Lane's closure and the displacement of more than 100 residents
is not an isolated event. Moreover, the threat of park closure and dislocation
is not new to the 3.5 million families who live in an estimated 50,000
manufactured-home communities across the country. Most-75 percent-are
considered low-income and rent the land underneath their homes, leaving
them vulnerable to the whims of the investor-owners of their communities.

What is new is the pace and scale of closures, which have sent thousands
of mostly low- and moderate-income people scrambling to relocate. In
Florida recently, a Circuit Court judge did not stop sale of an East
Naples park, leaving 300 homeowners stranded. In the last 12 months,
an estimated 20 manufactured-home communities were projected to close
in Washington State, affecting nearly 900 homeowners. In Minnesota,
where Shady Lane was located, at least 12 communities have closed since
2000.

Several factors are driving the closures. Owners have the opportunity
to make large profits because of rising land values and deteriorating
community infrastructure. Investor-owners see the higher values, evaluate
"higher and better uses" for the land and sell the land at
a tidy profit. Often, the sales go through in the absence of regulations
that might give residents the option of buying their communities.

Today, as closures become more common, creating a ripple effect of
personal and community loss, the issues faced by these homeowners are
finding their way onto the agendas of practitioners, lenders, agencies
and policymakers in numerous states. (See sidebar)
"Manufactured-home communities [had] been somewhat invisible until
they actually started disappearing," notes Cheryl Sessions of ROC
USA, a new nonprofit program that supports resident ownership. "These
communities represent the largest source of unsubsidized affordable
housing in the country."

A Shift in Viewpoint and Building a Response
The Ford Foundation,
led by the research of Senior Program Officer George McCarthy, has helped
bring attention to manufactured-home communities. McCarthy's efforts
have identified promising examples of nonprofit practitioners around
the country who are preserving and creating economically secure manufactured
housing for low- and moderate-income families.

For example, Homesight,
a nonprofit developer in Seattle, Wash., created Noji Gardens, using
new manufactured-homes to lower construction costs and deliver a decent
product in a high-cost market. The New
Hampshire Community Loan Fund's Manufactured Housing Park Program
created a comprehensive strategy of resident-owned communities in their
state.

These and other innovative local efforts brought the Ford Foundation
to CFED, a nonprofit
based in Washington, D.C. CFED seeks out promising ideas and policies
that can enhance economic opportunities in communities. CFED, which
invests in affordable communities where manufactured-home buyers have
control of the land and access to conventional mortgages, initiated
the "I'M HOME" program (Innovations in Manufactured Homes),
which ensures that families who choose manufactured homes receive the
same treatment as traditional homeowners.

"Since 2005, we have made more than 25 investments-worth nearly
$2.5 million-in new developments, community conversion programs, development
of mortgage products and advocacy," says Kathryn Gwatkin Goulding,
director of I'M HOME. "The results so far are promising. It's amazing
how a little support can unleash a chain reaction among practitioners
in this sector." These relatively small investments are getting
traction, as evidenced by a recent NeighborWorks
America Symposium on Manufactured Housing, which attracted over
175 participants.

A Case Study in Preserving Parks
Since helping to create the first resident-owned manufactured-home community
in New Hampshire in 1984, the New Hampshire Community Loan Fund has
demonstrated a clear preservation and asset- and community-building
strategy. Today, New Hampshire has 85 resident-owned communities (known
as ROCs). That represents 17 percent of the market and 4,300 homeowners.

The New Hampshire model of resident-ownership is a cooperative one.
To acquire a community, homeowners first form a nonprofit co-op in which
each household has one share and one vote. The co-op finances the purchase
by borrowing money from local banks and the loan fund. This means that
homeowners do not have to take out individual loans to buy in. Public
subsidies are used for fixing unhealthy and unsafe water and septic
systems and deteriorating roads.

The services offered through the loan fund include conversion training,
technical assistance, network leadership development, project planning
and support, financing and home loans. The economic benefits of this
strategy were documented in a 2005 study by the Carsey Institute at
the University of New Hampshire. Comparing homes in eight towns, the
study documented that sales prices for homes in ROCs were 12 percent
higher per square foot than in comparable investor-owned communities.
Further, homes sold faster, and rents, after 10 years, were lower in
ROCs.

Florence Quast, a retired obstetrical nurse, is a passionate advocate
for the power of resident-ownership. The 69-year-old mother of three
was the first president of the Souhegan Valley Manufactured Housing
Cooperative, which bought its 59-home community for $1.5 million in
1985. "I think the owner was shocked that we'd come up with the
money."

The New Hampshire Community Loan Fund helped facilitate the financing
of the park in the growing southern New Hampshire city of Milford, advised
the residents on running a cooperative and continues to offer assistance
and new products such as home improvement loans and mortgages that are
not available through traditional financing channels.

"My proudest accomplishment is in helping us become a co-op and
buying the park because it's something people said we couldn't do,"
says Quast, who travels nationally to speak about resident-owned communities.
"Twenty years later, the co-op is still working. We are united,
so that anything that might affect this community, we make sure we have
a say in it."

Balancing Interests: Appreciation, Preservation, Access
Increasing home values, preserving the community and supporting access
for low-income homebuyers may seem like competing goals. But the structure
of these resident-ownership initiatives helps to minimize potential
conflicts.

Communities work best when people are invested in their homes and neighborhoods.
Homeowners invest in homes that hold some promise of return on investment.
It is reasonable to promote asset-building as an objective for this
housing segment, especially since the starting point is with homeowners,
not renters. With 17 percent of communities now resident-owned and with
a complementary single-family loan program in place, home values in
ROCs are higher than those in similar investor-owned communities, as
documented by the Carsey Institute study.

However, an individual homeowner's desire for appreciation in his or
her home doesn't have to lead to an unstable neighborhood structure
or windfall profits that result in the loss of the entire community.
Many resident-ownership entities are nonprofit member organizations
that have restrictions against any individual gaining from the sale
of a home within the community. These resale limitations can be rooted
in state law or effected through deed restriction. Such limits are a
reasonable prerequisite for public agencies that grant or lend vital
rehabilitation funds.

In fact, most homeowners are not interested in selling out. Generally,
their primary objective is to have control over their communities. "We
bought this community to preserve it for working families," says
Bob Cook, chairman of the Souhegan Valley Cooperative.

The result is a model of conversion where the land and community
are preserved and that supports affordable homes that perform in the
marketplace free of limitations (other than residency restrictions.)
So, then, how do we counter the risk that house-price appreciation decreases
access by low-income buyers?

As a general rule, in many markets, homes in manufactured-home communities
will tend to remain affordable, compared to homes on fee-simple land.
For example, new manufactured homes generally sell for about a quarter
of the price of new single-family units. According to the 2005 U.S.
Census, median sales prices for new manufactured homes were $51,000,
compared to $220,000 for new single-family units.

Moreover, preserved resident-owned communities can remain accessible
to low-income families as homes in these communities gain acceptance
as a homeownership asset from low-income mortgage programs like the
American Downpayment Dream Initiative and the dozens of other demand-side
programs.

Taking Resident Ownership to Scale
Access to financial resources is essential to stemming the tide of mobile-home
park closures, preserving the communities and building healthy neighborhoods
with engaged citizen leaders. The resources needed to achieve community
sustainability include policy advocacy, 105-percent community mortgage
financing and local training, organizing and technical assistance. The
park in East Naples, Fla., might have been saved if residents had been
provided such resources. It was reported in the Naples News on
December 9, 2006, that the judge's decision to deny the injunction was
based on the homeowners' failure to show proof that they "had access
to $8 million dollars needed to co-op the property."

With the help of the Ford Foundation and spurred by the New Hampshire
experience, leaders have begun to emerge to support the development
of resident-ownership infrastructure in other states. In 2005, the Meredith
Institute - taking its name from the first ROC in New Hampshire - was
launched to educate trainers and organizers in resident ownership. In
its first two events, 67 practitioners from 21 states have been trained.
Contracts with USDA and NeighborWorks America Training Institute will
bring training events to Georgia and Oregon in 2007. The national Manufactured
Homeowners' Association of America convention in Minnesota in September
2007 will include training by Meredith Institute trainers.

Spurred by the success of the Meredith Institute, the New Hampshire
Community Loan Fund developed ROC USA to carry its methods of community
preservation and asset-building program development to other states.
"Despite its small size, New Hampshire has acquired an almost mythical
status among tenant-rights activists and affordable-housing advocates,"
said Thomas P. Kerr of Mobilehome Parks Report, a newsletter
by and for investor-owners. With numerous national partners already
engaged, 2007 promises to be ROC solid.

Copyright 2007

Paul Bradley is
vice president of the New Hampshire Community Loan Fund and director
of ROC USA.

State
Laws that Foster Resident Ownership

To secure the benefits of resident ownership for mobile-home park residents,
it is important for states to enact laws giving residents the opportunity
to buy their communities. A handful of pioneering states have already
developed effective statutory guarantees, yet most states have not.
Without such policies, residents are vulnerable to rent increases, park
closures and arbitrary park policies and are usually locked out of the
benefits of ownership.

There are three types of state laws that promote resident ownership.

Right of first refusal laws require park owners to give residents
notice before selling the park and the right to buy the park if they
can match the terms of the proposed sale. Connecticut, Florida, Massachusetts,
Minnesota, New Jersey and Rhode Island have such laws. However, all
of these states' statutes have significant loopholes that can undercut
the laws' effectiveness.

Notice-only laws require park owners to give notice to residents
before selling the park, but do not give residents a right of first
refusal. Some require the park owner not just to give notice, but also
to negotiate with the residents in good faith if the residents make
an offer to buy the park. These laws, which are in place in California,
Maine, New Hampshire, Nevada, Oregon and Vermont, can be highly effective
if they are coupled with a vigorous infrastructure that helps residents
arrange funding. Most of the states' statutes (with the exception of
New Hampshire and Vermont) have significant loopholes, however.

Tax incentives are provided in Oregon and Vermont, if the park
owner sells the park to the residents.

The National Consumer
Law Center has launched a new project to help advocates develop
policies that foster resident ownership. For more information, contact
Odette Williamson or Carolyn Carter at 617-542-8010 or Jon Van Alst
at 202-452-6252.